EDWARD Chancellor, the man who predicted the global credit led economic downturn in 2007, has referred to Australia as being amidst an “unsustainable housing bubble” with values potentially more than 50 per cent above their fair market value.

Mr Chancellor, who is employed by US investment bank GMO, said Australia is in the middle of a once-in-a-40 year event, adding the bubble could burst at any time.

“If house prices were to revert to their historic long-term average (ratio of average price to average income) they would fall quite considerably,” Mr Chancellor said of values.

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